Democrats Accuse Tax Prep Firms Of Undermining Free Filing

Democrats are outraged that businesses are allegedly fighting back against the federal government’s attempts to take over their market. Congressional lawmakers accuse large tax preparation firms of working to derail the IRS’s coming electronic free file tax return system.

Among those accused by legislators are H&R Block and Intuit.

Democrats demand data from these firms to reveal lobbying, hiring, and revenue details to expose efforts against the new program. In letters exposed by the Associated Press, these companies allegedly hired former government workers to turn public opinion against the plan.

Sen. Elizabeth Warren (D-MA) and Rep. Katie Porter (D-CA) sent letters to multiple companies along with the American Coalition for Taxpayer Rights and the Free File Alliance. These are organizations that provide free filing services through the IRS website.

Specifically, the two lawmakers demand to know how much revenue the companies have taken in since joining the Free File Alliance.

They also want a listing of former government employees hired within the last two years. Logically, however, wouldn’t tax preparation firms want to have former IRS workers in their ranks who theoretically know the tax system?

The letter accused the tax preparation industry of engaging “in a long and aggressive lobbying campaign to prevent the IRS from offering taxpayers a direct filing option.”

Intuit spokesperson Derrick Plummer strongly disagreed with the Democrats’ allegations. He noted that there is already a free filing system in place, and the government’s encroachment into the industry will hardly be free for those who fund Washington.

He responded, “An IRS Direct File system is redundant and will not be free — not free to build, not free to operate, and not free for taxpayers.”

Plummer added that the government’s entry into the free filing system is a “solution in search of a problem, and that solution will unnecessarily cost taxpayers billions of dollars.”

Similarly, an H&R spokesperson said the IRS would be far better served in using the funding to improve existing services for taxpayers.

The Free File Alliance agreement was enacted in 2003. During its 16 years in place, some critics believe it prevented the IRS from implementing its own filing system. That agreement expired in 2019.

It targeted taxpayers earning $73,000 or less annually. However, critics also charge that only 3% of eligible citizens take advantage of the current system.